Escorts hits all-time high after recording best-ever August tractor sales

Shares of Escorts zoomed 10 per cent to its fresh all-time high of Rs 1,221 on the BSE on Wednesday. It has rallied 12 per cent in the past two trading days after the company’s Agri Machinery Segment (EAM) reported an 80 per cent year-on-year growth in tractor sales at 7,268 units in the month of August. The stock surpassed its previous high of Rs 1,211, touched on July 22, 2020.

It had sold 4,035 tractors in August 2019. On month-on-month (MoM) basis, the volume was up 36.6 per cent, Escorts said in a statement. The company's domestic sales rose by 79.4 per cent to 6,750 units from 3,763 units, while exports rose by 90.4 per cent to 518 units from 272 units.

Escorts said the market sentiment continues to be highly positive with good monsoons, better Kharif sowing, crop prices holding up well and good supply of retail finance.

The management remains optimistic for the upcoming festive months. The supply side situation improved significantly as compared to last month. “We are currently operating close to peak capacity now. In August 2020 we could build some inventory both at dealer and depots, which since last few months was at very low levels,” the company said.

“Good rainfall season, steady rabi and pre-monsoon kharif sowing and high-water reservoir levels augur well for the sector. Farm loan waivers, direct cash transfer schemes by states which are major tractor markets and increased budgetary allocation under the Pradhan Mantri Gram Sadak Yojana (PMGSY) and the Pradhan Mantri Awas Yojana-Gramin (PMAYG), coupled with adequate financing availability are easing farmers’ access to credit,” Escorts said in FY2019-20 annual report.

“The better-than-expected set of numbers were on the back of good rural demand. We continue to remain positive on the tractor segment as we expect strong demand to remain strong in FY21,” Jyoti Roy, DVP- Equity Strategist, Angel Broking said.

At 02:46 pm, Escorts was trading 9 per cent higher at Rs 1,213 on the BSE, against 0.39 per cent gain in the S&P BSE Sensex. The trading volumes more-than-doubled with a combined 5.03 million shares changing hands on the NSE and BSE so far.